A California state court denied an insurer's motion to dismiss Goodwill Industries in Orange County & # 39 ;s COVID-19 business interruption following a clear review of how California & # 39 ;s federal courts applied (or rather incorrectly applied) California & # 39; s COVID precedent. 19-case. The case is Goodwill Industries in Orange County, California against Philadelphia Indemnity Insurance Co. No. 30-2020-01169032-CU-IC-CXC (Cal. Super. Ct. 28 January 2021)
A single appeal, issued several years ago, long before the perception of COVID-19 and its resulting losses , has taken center stage in California COVID-19 disputes: MRI Healthcare Center of Glendale, Inc. v. State Farm General Insurance Co. ., 1
Goodwill court recognized that California federal courts interpreted MR to "require a physical alteration of the property or permanent abolition of the property to qualify as" direct physical loss. " Without commenting on the soundness of this interpretation, the California State Court in Goodwill pointed out that neither party had cited a case in California and resolved the issue of coronavirus or COVID-19 causing "direct physical loss" of property
In any case, Goodwill Court also found that the policyholder's express allegations that coronavirus and COVID-19 caused direct physical loss and damage to its property differ from Goodwill's claims from those brought before a federal court. Alleged goodwill:
- Coronavirus and COVID-19 are found in respiratory droplets called aerosols that stay on surfaces and in the air for up to a month.
- , deadly and dangerous.
- Coronavirus and COVID-19 were present on Goodwill's properties at the time of the decision to close the state and county; and
- When Go odwill reopened its properties, its employees tested positive, and it had to carry out “additional cleaning and sanitation to respond to and remove coronavirus and COVID-19 from physical surfaces in its insured premises and properties in accordance with public health orders requiring such measures. to protect against the coronavirus and COVID-19.
If the court interpreted these allegations as true, it could not legally agree that they did not show "direct physical loss" in accordance with MR . According to the court, unlike goodwill, the policyholders in the previously decided federal cases did not claim that COVID-19 physically transformed their property. Claims matter.
Finally, the Court noted the "second standard" applied by federal courts. Goodwill the Court was not convinced that it had a "sufficiently complete record … to legally determine that coronavirus and COVID-19 did not, in any way, cause damage to property."
The goodwill court decision is in line with other out-of-California court decisions, and it reflects a well-founded approach to California's precedent and the application of state property law to the allegations in COVID-19 business interruption claims.